The election: terminate or affirm
When a right to terminate arises - whether from a repudiatory breach or a contractual trigger - the innocent party must elect between two inconsistent courses: terminate (accept the repudiation, or exercise the clause), or affirm (treat the contract as continuing). Once you affirm, you lose the right to terminate for that particular breach - though you keep the right to terminate for any later or continuing repudiatory conduct, and any separate express termination right.
The election must be communicated clearly and unequivocally (Vitol SA v Norelf Ltd [1996] AC 800). And affirmation requires knowledge: in Peyman v Lanjani [1985] Ch 457 the Court of Appeal held that a party is not taken to have elected to affirm unless it knew both the facts giving rise to the right and that it had the legal right to choose. Matthews v Smallwood [1910] 1 Ch 777 is to the same effect on knowledge of the facts.
Waiver needs knowledge of the right: URE Energy
That knowledge requirement was confirmed at appellate level in URE Energy Ltd v Notting Hill Genesis [2025] EWCA Civ 1407 (upholding the first-instance decision at [2024] EWHC 2537 (Comm)). A supplier continued to perform for months after an event - an amalgamation - that had triggered an express termination right, but without realising the right had arisen. The Court of Appeal held it had not waived the right: a party does not lose an express contractual termination right merely by continuing to perform after the trigger, unless it had actual knowledge of the right at the time.
The court rejected the argument that a party is deemed, as a matter of law, to know the termination rights in its own contract. So continued performance in ignorance of the right is not, by itself, affirmation - but once you know, you must decide.
Affirmation by conduct - and why reservations may not save you
Where you do know of the breach and the right, affirmation can happen through conduct, and boilerplate protections may not prevent it. In Tele2 International Card Company SA v Post Office Ltd [2009] EWCA Civ 9, continuing to perform without protest for nearly a year amounted to an election to affirm - despite an express no-waiver clause - because no such clause can prevent an election being made by conduct.
A reservation of rights is not a guaranteed shield either. In SK Shipping Europe Ltd v Capital VLCC 3 Corp (The C Challenger) [2022] EWCA Civ 231, charterers who reserved their rights but then ordered a further two-month voyage were held to have affirmed: demanding substantial further performance was inconsistent with treating the contract as at an end. Conduct can override the words of a reservation.
The wait-and-see middle ground
English law does allow a measured pause. In Force India Formula One Team Ltd v Etihad Airways PJSC [2010] EWCA Civ 1051, Rix LJ recognised a legitimate wait-and-see position for complex, medium-term relationships destabilised by events - a middle ground in which the innocent party takes reasonable time to consider its position without yet electing either way.
And affirmation is not necessarily forever. In Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574, the House of Lords held that affirmation prima facie relates only to the past, leaving open the right to terminate for a continuing or renewed breach. But wait-and-see is a narrow refuge - drift into business as usual and you may be found to have affirmed.
Stay ready and able to perform: Olam
Keeping the contract alive carries a separate danger to your damages. Even against a repudiating party, you must be able to prove you would have been ready and able to perform but for the breach in order to recover substantial damages. In Olam Global Agri Pte Ltd v Holbud Ltd [2025] EWHC 3187 (Comm), a buyer alleged repudiation but kept the contract alive and then redeployed its nominated vessel; on a section 69 appeal the court expunged a substantial damages award (around EUR 4.8 million) because the buyer could no longer show it would have been able to perform in the but-for scenario.
So if you choose to keep the contract open, stay demonstrably ready and willing, and do not redeploy the very resources you would need to perform. Practical preservation steps: document the breach with dated evidence; send a prompt holding notice that reserves rights specifically without confirming the contract will continue regardless; set an internal decision deadline; and stop any conduct (new orders, accepting non-conforming performance without protest) that reads as an unequivocal election to continue.
Use at the desk
Practical checklist
- On discovering a breach, decide deliberately whether to terminate or affirm - affirmation is generally irrevocable for that breach.
- You do not waive a termination right you did not actually know you had (Peyman v Lanjani [1985] Ch 457; URE Energy [2025] EWCA Civ 1407) - but once you know, decide.
- Do not assume a no-waiver clause or a reservation of rights prevents affirmation by conduct (Tele2 [2009] EWCA Civ 9; SK Shipping (The C Challenger) [2022] EWCA Civ 231).
- Avoid conduct only consistent with continuing - new orders, accepting non-conforming performance without protest, renegotiation framed as continuation.
- A wait-and-see pause is legitimate but narrow (Force India [2010] EWCA Civ 1051) - document that you have not yet elected.
- If you keep the contract alive, stay ready and able to perform and do not redeploy resources you would need (Olam v Holbud [2025] EWHC 3187 (Comm)).
This guide is informational only and is not legal advice. It does not replace advice from licensed counsel on the facts of a specific transaction.
Product demo
Use the guide for context. Use Veqtor for the Word documents.
Watch Claude compare negotiation drafts and create a separate Word document with proposed tracked changes.
See Veqtor work with Word redlines